Former mayor gets tough about the federal debt

Former Houston mayor Bill White has written "America's Fiscal Constitution," a book about the federal debt.

Former Houston mayor Bill White has written "America's Fiscal Constitution," a book about the federal debt.

Photo: Johnny Hanson, Staff

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"America's Fiscal Constitution" by Bill White

"America's Fiscal Constitution" by Bill White

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Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term Democratic mayor who also served as the deputy secretary of energy of the United States, has written a new book about federal debt. "America's Fiscal Constitution: Its Triumph and Collapse" ( Johnny Hanson / Houston Chronicle ) less

Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term ... more

Photo: Johnny Hanson, Staff

Image 5 of 7

Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term Democratic mayor who also served as the deputy secretary of energy of the United States, has written a new book about federal debt. "America's Fiscal Constitution: Its Triumph and Collapse" ( Johnny Hanson / Houston Chronicle ) less

Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term ... more

Photo: Johnny Hanson, Staff

Image 6 of 7

Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term Democratic mayor who also served as the deputy secretary of energy of the United States, has written a new book about federal debt. "America's Fiscal Constitution: Its Triumph and Collapse" ( Johnny Hanson / Houston Chronicle ) less

Portrait of Bill White at his downtown Houston office, where he is the chairman for financial advisory and asset management firm Lazard Houston, Wednesday, March 26, 2014, in Houston. The former three-term ... more

Bill White, former three-term mayor of Houston, wants to talk about federal debt.

His new book, "America's Fiscal Constitution: Its Triumph and Collapse," plucks practical lessons from the nation's five previous spikes in debt - the years following the American Revolution, the War of 1812, the Civil War, World War I and World War II. After each war, he explains, the country climbed out of its financial hole thanks to Republicans and Democrats committed to balancing the nation's books.

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Under the Clinton administration - where White served as U.S. deputy secretary of energy from 1993 to 1995 - the federal budget ended with a slight surplus, White notes. But after that, the government cut taxes and borrowed money for wars in Iraq and Afghanistan. Leaders in both parties broke the traditional relationship between taxes and spending, and debt spiralled out of control.

White, 59, lost his bid for governor in 2010.

"I have no itch to run for public office," he says. "I like my life exactly as it is."

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Books

An avid cyclist, White is now a senior adviser at Lazard, a global financial advisory and asset management firm. "America's Fiscal Constitution" is his first book.

Q: Did your decision to write about America's fiscal health come from frustration with political leadership over the past 14 years?

A: I was worried about borrowing that would mortgage the future of the country. And I wanted to tell a story that I hadn't read anywhere else. It was a story about how generations of people had worked to balance federal commitments and revenues so we didn't incur excessive debt.

Q: In the book's acknowledgements, you thank your three children, noting that they "accept their responsibilities as citizens and respect idealism." You strike me as an idealist. How much of your political philosophy has to do with the way you approach the world?

A: A lot of us have to be reminded from time to time that the measure of life is really what you leave behind. It's how much you give and not how much you take. What you give can last well beyond your life, and that is a basic ideal behind our traditional fiscal constitution. Look, you can talk about economics and balancing the budget and many people's eyes will glaze over. But ultimately, it's all about leaving a place better than you found it. Early on, Jefferson had this discussion with Madison about whether to amend the Constitution in order to limit the amount of debt - so that they didn't saddle a future generation with bills that should have been borne by their own generation. To me, that is the essence of idealism. It may seem very practical, but it is part and parcel of what America is.

Q: Some basic practices in the history of our government's money management - a pay-as-you-go philosophy, specific authorization of the amount and use of each new debt - are the same practices a family budget might follow. How did the U.S. government stray so far from its original habits and traditions?

A: It occurred fairly suddenly. We balanced the budget in 2000. After 2000, leaders in each party broke the link between spending and taxes. Each party had a tax policy and a spending policy, and the tax policy didn't pay for the spending policy. A government, like a family, should know that the more of your income you have to use to pay back old debts, the less you will be able to use for things you want and need now.

Economists like to remind people that nations aren't like families, that nations do have some ability to print money and to tax. But nations and businesses and families all have to deal with a common rule that if you borrow money, you have to pay it back later with interest. And if you borrow every year to pay for your interest and more, then your interest will begin to compound. Once compound interest reaches a certain level, it will continue to accelerate. It will grow faster than the national income grows. And then you're in a deep hole.

Q: Who's the audience for this book?

A: I think people who are interested in history, like I am, will enjoy reading the book through the lenses of budgets, which give you a different picture, often, than the rhetoric of politicians. And I think people who are interested in business and finance and want to know whether the United States could go the way of Greece or Spain or Italy will be interested because it helps them put the current debt situation in context. But I wrote the book for what I call fiscal reformers who are active in the Republican Party and the Democratic Party. It was written for conservatives and progressives who want to take their parties back.

Q: Is there a time in U.S. history when the magnitude of federal debt was comparable to today?

A: Only twice in American history has our total debt been equal to the annual national income. That has happened today, and it happened at the end of World War II. At the end of World War II, there were political leaders such as Harry Truman and (Republican Sen.) Robert Taft who fought like cats and dogs over many issues but shared a common, stubborn commitment to ending deficit spending. They made tough choices, and they explained those choices to the American people in a clear way. … So in the five years after World War II, the government spent no more than the tax revenues it took in. Spending was cut very rapidly. Some predicted that would cause a major recession - and there was a slight downturn - but we came out of it quickly and we were on the way to a period of some of the most rapid economic growth the country has had.

In contrast, in 2001 President George W. Bush articulated his economic policy with a joke. He quoted Yogi Berra and said: When you come to a fork in the road, take it. We spent more, and we cut taxes. We spent for traditional purposes such as waging war and, after 2008, for plugging holes during economic downturns, but we also borrowed to pay for routine expenses such as higher national security expenses unrelated to war and an expansion of Medicare. … Now, in 2014, we've had a withdrawal from combat and the national income is at an all-time high, and yet the federal government still borrows money to pay for its routine operating expenses. The attitude after 2000 was different than it had been after WWII. And one of my central points is that there was never really a public debate or referendum on that issue.

Q: Did your experience as mayor convince you that the public can swallow hard truths about budgeting?

A: I think so. As mayor, I would go to town hall meetings, civic club meetings or neighborhood meetings probably five to 15 times a week. Hundreds if not thousands of times I explained to people that if they wanted improvements for their neighborhood, then we would either have to raise property taxes or cut from the largest spending in the city government - which was police, fire and EMS services. That's what you had to do to make the budget balance. I found that at the end of those conversations, people didn't always agree with you, but they understood where you were coming from.